Beaton v McDivitt

Supreme Court of New South Wales (1987) 13 NSWLR 162

Overview

Considered theory of consideration - bargain theory.

Facts

The respondent (McDivitt) promised to transfer a portion of his land to the appellant (Beaton) when a proposed rezoning occurred if, in the meantime, the appellant worked the land in a specified way. Beaton moved onto the land and worked it as required (inc building a house). Seven years later a dispute arose and Beaton was ordered off the land.

Issue

Had Beaton provided valuable consideration?

Held (on this point)

Beaton had provided consideration for the respondent’s promise to transfer the property by working on the land in the manner stipulated; this constituted a detriment sufficient for consideration.

Kirby P (dissenting on this point)

'The modern theory of consideration has arisen from the notion that a contract is a bargain struck between the parties by an exchange’ – it is not based on notions of reliance. The ‘price’ for a promise can be an act, forbearance or promise. Here there was no consideration – the promises given (in relation to the land transfer) were not provided as a ‘quid pro quo’ for anything provided by Beaton.

McHugh JA

Noted that the bargain theory of consideration applies in Australia (amounting to a rejection of the ‘reliance’ theory); in particular, that theory requires a ‘quid pro quo’ between the parties. In this case there was such consideration – consideration for the promise to transfer was the act of Beaton in coming and working on the block as requested. This constituted a ‘detriment’ suffered by Beaton and that is sufficient for consideration.

Mahoney JA

Agreed with McHugh JA on the issue of consideration.

Note

The appeal was dismissed because the contract was found to have been frustrated